The Sunnyvale, Calif.-based processor designer reported earnings excluding items of of $110 million, or 15 cents a share on sales of $1.69 billion.

Analysts polled by Thomson Reuters were expecting earnings excluding items of $78.4 million, or 10 cents a share, on sales of $1.65 billion.

Gross margins came in at 45%, compared to the 44.7% investors had penciled in.

During the year-ago quarter, AMD reported earnings excluding items of $108 million, or 15 cents a share, on sales of $1.62 billion.

AMD told investors it expects revenues to increase 3%, plus or minus 2%, sequentially, for the current quarter. Before AMD’s announcement, analysts were looking for earnings excluding items of $113.8 million, or 15 cents per share, on $1.7 billion in sales.

AMD’s results were a much needed boost after the company slashed its revenue and gross margin guidance last month due to manufacturing issues at a chip factory run by Globalfoundries.

The problem: the German factory, or ‘fab’ in industry parlance, isn’t cranking out as many of AMD’s ‘Llano’ processor as expected. Llano is one of the latest in a series of promising designs -- which AMD calls Advanced Processor Units, or 'APUs' -- that put graphics processing cores on the same slice of silicon as a central processing unit (CPU). AMD reported trouble building less advanced chips elsewhere as well.

Managing the setback will be a test for new Chief Executive Rory Read, appointed last August. Since his appointment, Read has been building out his management team. Hires include new Chief Technology Officer Mark Papermaster, a veteran of Cisco, Apple, and IBM.